Bob Evans Farms, Inc. has filed with the Securities and Exchange Commission its preliminary proxy statement in connection with its 2014 Annual Meeting of Stockholders. The company also reported that it has made several good faith attempts to work with Sandell Asset Management and its affiliates to arrive at a constructive settlement to avoid a costly and divisive proxy contest. It said, unfortunately, Sandell has spurned all of these efforts.
The company also announced today that the Board has determined that, notwithstanding the previously announced retirement of Larry Corbin and Robert Lucas from the Board immediately prior to the Annual Meeting, the size of the Board will remain at 12 directors. The Board has nominated a slate of 10 directors for election for the available 12 seats at the Annual Meeting, and it expects that two nominees who were not nominated by the Board will be elected at the Annual Meeting.
Since Sandell is the only stockholder that has notified the company of an intention to nominate directors for election at the Annual Meeting by the applicable deadline, the election of all of Bob Evans' 10 director nominees would still provide for the remaining two Board seats to be filled by two of the Sandell nominees.
As reported in the proxy material, on June 3, 2014, the company proposed to Sandell, through Sandell's representatives, to name two of Sandell's nominees to the Board, and to have them join the Finance Committee of the Board, which would be charged with undertaking a full review of the company's strategy. However, Sandell rejected this offer, proposing instead that the Board not only name four of his director nominees to the Board, but also require that the Board, before any further review, commit to implement Sandell's full agenda, including all of Sandell's financial proposals.
"The offer the Board made to Sandell is consistent with efforts the Board has made over the past eleven months to attempt to work constructively with Sandell," says Steve Davis, Bob Evans' chairman and CEO. "We have repeatedly emphasized that, while we have subjected our financial and strategic plans to rigorous review on a regular basis, including in consultation with independent financial advisors, and are confident that we are on the right course, we are not so captivated by our own ideas that we do not welcome fresh thinking.
"Reflecting this open mindedness, in the past two years, we have added four new independent directors to our Board. And, as we announced on May 30, we reached out to the nine director nominees proposed by Sandell, seeking to meet with them in a good faith effort to consider their candidacies. We had committed to do this when Sandell first proposed them, and we followed through on the first business day after the close of the period for stockholder nominations. As we noted, each of Sandell's nominees had consented to being named in Bob Evans' own proxy as a nominee and to serve as a director if elected. It is perplexing, therefore, that none of these nominees, save one, even replied to our invitation, and the one who did, declined.
"Our approach is consistent with the offer we made to Sandell in January to settle the pending contest by offering Sandell the opportunity to consult with the Board on the identification and selection of new independent directors who were ultimately added to the Board in April. Sandell rejected that offer. It is also reflective of the openness we have shown to Sandell since he first contacted us 11 months ago. I and other members of the Bob Evans management team spoke last summer at length with Sandell and his staff. Sandell also has spoken with Michael Gasser, the Board's lead independent director, and with Lazard, the Board's independent financial advisors.
"We are disappointed that Sandell has not joined us in a constructive approach, but I want to assure all of our stockholders that the Board remains open to pursuing a solution that will avoid a costly and divisive proxy contest," Davis concluded.
